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'Wal-Mart loophole' crackdown is focus of bill proposed by California lawmaker

May 10, 2013 12:00:00 AM PDT
With her schedule reduced, full-time retail associate Barbara Andridge couldn't afford to buy her own health coverage any more, and so she enrolled her son in a government program.

"He's on Medi-Cal now, and I'm going to have to enroll and get it myself too," said Andridge.

Critics say that's a growing trend. Beginning next year, the federal Affordable Care Act requires employers to provide coverage to anyone working 30 hours or more a week. So to avoid the mandate, hours are reduced. The smaller checks are forcing many low-wage workers to go on taxpayer-paid state programs like Medi-Cal.

"I don't think that's right," said Assemblyman Jimmy Gomez (D-Los Angeles).

Gomez has a measure to financially penalize anyone trying to take advantage of what's been dubbed the "Wal-Mart Loophole," though other companies are accused of side-stepping the healthcare mandate.

The money will go to Medi-Cal. If the problem isn't fixed, Gomez estimates taxpayers will have to pick up the tab of an additional 400,000 Californians.

"The non-federal, state portion of Medi-Cal will continue to grow until it squeezes out all of the programs: education, public safety. You name the program, it will be squeezed out," said Gomez.

Companies deny hours are being reduced to circumvent the law. Opponents, including Wal-Mart, are teaming to fight the proposed penalty. They say there's already a federal penalty and that the state's fine could be six times that, or up to $15,000 per employee. They insist any added costs will hurt the economy.

"It's like a gun to the employer's head," said Bill Dombrowski with the California Retailers Association. "It promises to increase our unemployment rate -- guarantees it. And that's what we're telling people."

Andridge just wants her fulltime hours back and health coverage.

"It's something I should be able to provide for my family," she said.

The Gomez bill has until mid-September to get to the governor's desk.

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